BENGALURU: Asian currencies were subdued on Monday, with continued pressure on the Indonesian rupiah on concerns the country’s finance minister may resign, while Singapore’s dollar was tepid after the central bank stood pat on its monetary policy, as expected.
The rupiah, one of the worst-performing currencies so far in 2024 after falling nearly 3%, has declined by more than 1% against the US dollar in the past week.
Confidence in the Indonesian rupiah has faltered over the last two weeks following local media reports that Finance Minister Sri Mulyani Indrawati could quit ahead of the Feb. 14 presidential election, which raised questions about the country’s fiscal outlook.
The Singapore dollar was muted after the Monetary Authority of Singapore, which has moved to a quarterly meeting schedule in 2024 from a semi-annual schedule, left its policy unchanged for a third time following five consecutive tightening moves since October 2021.
“We cannot rule out a small probability of another policy tightening, if inflation turns out higher than expected due to geopolitical shocks, better-than-expected global growth or a pick-up in domestic price pressures due to the pass through of accumulated business costs,” analysts at Maybank wrote.
Along the same lines, analysts at Barclays said the likelihood of foreign exchange policy easing this year in Singapore is lower than what most market participants are pricing in.
The regional calendar for the week includes PMI’s from across the continent, with fourth-quarter growth figures from Taiwan, Hong Kong and the Philippines, and the latest inflation figures from Indonesia and South Korea.
While China’s efforts last week to support its ailing markets helped lift sentiment, a court order to liquidate property giant China Evergrande Group could deepen the crisis in the real estate sector and dampen investor confidence in Southeast Asia’s largest trading partner.
The Chinese yuan was unchanged, while stocks in Shanghai reversed minor gains clocked in early trade to dip 0.5%.
Among other currencies in the region, Thailand’s baht was flat, while the Taiwanese dollar edged 0.2% higher.
Fiscal uncertainty has weighed on the baht after the Bank of Thailand faced repeated requests from the government to cut rates amid concerns of a weakening economy.
The Philippine peso led losses, while the Malaysian ringgit was tepid.
Shares in the emerging markets were mostly trading higher, extending a relief rally from last week on measures by Beijing designed to shore up the equity market and boost the recovery of the world’s second-largest economy.
Shares in South Korea led the charge with a 1.4% gain, while those in India were up more than 1%. Stocks in Indonesia and Malaysia were up 0.3% and 0.4%, respectively. Those in Singapore and Philippines lost over nearly 0.4% each.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up by 0.7%, notching a near two-week high.
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